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Understanding the demand for and supply of social finance

What is the nature of demand for capital from social finance intermediaries? What mix of financing will the Big Society Bank (BsB) need to support?

Key findings:

In both the social finance and financial exclusion markets in the UK the Big Society Bank could make a difference.

The absolute amounts needed from a funder like the BsB total hundreds of millions rather than billions of pounds. The majority of demand for this capital is for soft capital (semi-commercial capital, which may take years to return the principal, and grants).

Building the market is essential, which requires grants or very patient capital. The BsB may have to make a trade-off between building the market and maintaining its capital.

This report presents the findings of research delivered by New Philanthropy Capital (NPC).

NPC was asked to consider the demand for capital in three target markets: social finance, financial inclusion, and social housing. In our report, the first of these, social finance, covers the demand from social finance intermediaries to supply capital to charities, social enterprises and businesses with a social purpose. The second, financial inclusion, explores demand for capital from non-profit providers of affordable loans in the UK. The third, social housing, looks at demand for capital from housing associations.

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